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tv   U.S. Senate  CSPAN  January 16, 2013 5:00pm-8:00pm EST

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livelihood as soon as possible. and the discovery encountered was japanese people have a culture with natural disasters. ..
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the local committee. so we need a broader -- we need to get involved in -- [inaudible] we try to make in the process. so this process takes some time. and finally, every time you have this -- there's a effort. so it's sometimes to engage public in a foreign debate. many of the important issues. the new policy is a case in point. so those are the challenge that we will be faced with. >> thank you. so taking this cascade to the logical extreme here. we get to the environmental
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impact, i'm hoping you have been studying how the radiation from fukushima has affected the environment. maybe you can give a summary what you have so far. >> yes, thank you, john. i would like to thank the organizers for being here. first visited fukushima in july of 2011 shortly after the disaster. and we spent about six weeks there since that time monitoring the movement of the contaminants and looking at the effect on the biological community. everything we have learned is new. it there's never been an event quite like this. there was twenty six years and we worked on that but the fukushima event and luckily was smaller, at least on the terrestrial side. we're thankful that are if that. the sorts things we've been
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looking at how are the insects, birds, microbes effected. are there measurable containment. and, you know, the first sets of results for preliminary published. we had a couple of paper published related to biodiversity as well as the major insect groups. the most striking thing to come from it is the level of variation among different groups. birds and butterflies, for instance, showed very strong and rapid responses to the contaminant, which we have seen. but many of the other insect groups, for instance, didn't appear to be directly and immediately effected. so dragon flies and grass hoppers, for instance, seem to be about the same numbers as they were the year before. we since gone back for a second
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year of monitoring and the pattern is changing. we haven't published the results yet. i can't give you too much. >> maybe a hipt? >> a hint. well things have not got, better. i can say that. and what comes from, you know, the message from these observations to us are that we need to be investing in some of the basic research to continue this kind of monitoring. this really is a unique event. a horrible event we but it provides an opportunity develop the consequences for wile life in ways that aren't possible in any other scenario. >> could you quickly just characterize the environmental impact as much as you know now? you studied chernobyl so many years. compare chernobyl and fiewk fiewksha ma? >> we have vast quantities of
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radioknew clives spread at the landscape scale. the landscape scale of cher initial is larger. there's highly con named e qo system. in fukushima it's three or four hundred kilometers that are highly containmented. and chernobyl, because it was a nuclear fire that burned for ten days, it released a greater diversity of radioactive element including plutonium that were also scattered across the environment. and these other radionuke collides have different physiological -- for organize nafms exposed. which converts to very
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biological will be around for thousands of year. where as in fukushima what we have now primarily are two isotopes. which is abundant in cher noble. but fukushima is the two isotopes that are were abundant. the consequences are lukely -- likely to be different for the e qo system. we don't know how and what the time course will be for the consequences. >> okay. i'd like to come back to you for a second. before somebody brought up -- and one of the things that happened when the tsunami hit was that other countries immediately realized this was a nation that needed all the help they could get there. did it take a little bit long ensure japan is a country with other resources. did other countries think that
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it was maybe something japan could handle on its own? >> well, japan is one of the most disaster-prone countriesed in the world, and we thought we pretty much were god. but we learned from the year the recent disaster is there is no guarantee that a disaster will remain the boundary 58 suppletions. so -- boundary of assumptions. actually we needed all of the help from the other countries. and actually about 160 countries came forward with the various types of assistance. and as i said in my previous
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remarking, the privileges the u.s. course made a real difference. in -- [inaudible] in the efforts so was the technical assistance provided. the u.s. -- [inaudible] for the nuclear disaster in fukushima. >> i want to move along here to another topic, which is what other places can learn from some things that happened. i'm curious, mr. willard, whether you think there are lessons for say, california has nuclear reactors along the coastline. are there lessons and have people learned them? >> i think as fukushima began to unfold, that nuclear industries globally began to respond. quite honestly, the u.s. nuclear industry very aimpressively --
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aggressively begin to inventory the spare equipment and look at the own ability to withstand and event such as japan was experiencing. there are myriad lessons that have been learned, and the institute of nuclear powers operation was asked to assist in gathering the lessons learned from the nuclear sites along the coastline, and to share those broadly in the u.s. as well as through the world organization of nuclear operators globally. so fukushima has been at the fore front of dialogue throughout this industry. quite frankly the idea of beyond design basis external event such as japan experienced has ranged in terms of lessons learned just
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beyond the energy sector and the nuclear industry to many other areas that could experience similar events. >> okay. and going in -- to the effect on auto industry, are there things that have changed in terms of resilience with the auto industry, in terms of the supply chain or things that changed since fiewk fukushima? >> yes, i think there's a tremendous change take place. i think we have probably about 400 tier one suppliers. anything beyond the tier two down to event tier five, we didn't have not have any -- [inaudible] and we assume that supply chain shape like pyramids and suppliers take care of several
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tier two, three, and four. what we found in the case especially the semiconductor companies. it's almost like a spindle shape, and we are very surprised, and therefore, we have to make a -- supply chain even down to a tier five. so this work has immediately start. and what we have found is that there are about 2,000 critical parts where there's on one single suppliers or one special use. and therefore, there's no -- like that. so from then on ward until the end of this past year at 2012, we have done many new things. first of all, where we can find additional location of the cell supplier, we did. or where we can find additional
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or alternative supplier, we appointed them. so at least there are two companies with a different location or different dmean could supply the part in case of emergency disaster. in some cases like semiconductor is very, very tricky and very big volume necessary industry, and therefore, against the production system tps that we ask them to store four months supply in the process. so these exceptions but was necessary to have a now added -- [inaudible] instead of zero inventory in the process, we ask them to store four. and we also started doing standardizing the problem with the line and extending it to
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industry. which is not easy. because there is always a competent element. i think it is slow but steadily going on to have this part more so we can have, you know, economical solution for the alternative sources of parts and stuff like this. so by and large, by the end of december last year, we have completed this process on japan base supply about 90% is done now. and i think u.s. or north america is a second biggest production base we have. and they are just move along with taking the example of japan. now they are supposed to finish this complete work by the end of march. i must say to you humbly that
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has become stronger and better company. >> thank you. let's go to some of the questions from the audience here. the first one is, i think perhaps both answer qelt. is does it make sense to rebuild power power plants in communities in an area than destroyed by a tsunami? want to go first, mr. willard? first of all, as mentioned in my previous work. it will take time. before we can come up with the new set of policies regarding our new policy about wake of our experiences.
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and actually only two reactors now in operation in japan. and we have had political transition in recent weeks, and -- coming in, and take a look at the new policy. so it's not -- [inaudible] indefinitely but for the specific questions, there are two aspects. one is we are going to have regarding about the solution of policy. we have a more rigorous independent assessment of the location of the policy.
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so if any location is has had the experience of being struck by the natural disaster, that would be element would be looked at closely. the other political factor, if given the idea is prone to disaster, i think say it would be more difficult for the -- public on the lo caution of nuclear reactors. so that is my observation. >> mr. willard? >> i think that was well stated. essentially if you have an area that is frown disaster, and the defense in-depth that on industry can achieve an engineering site there is insufficient, then it wouldn't
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make sense to build a site there. i think it's really a rather simple question. and i think what was learned in this particular instance was that the assumptions the design assumptions of factors with regard to external events that could occur department match the event that did occur. at the end of the day, this was once in a thousand year event that no one imagined. and the unimaginable happened. so i think the thought that must go in to the engineering factors associated with construction in my disaster prone region needs to be executed very well. >> okay. next question about fisheries. i think -- [inaudible] the question is what is japan
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what should or is japan doing beyond measuring radio in fish to assess the long-term contamination. is it effected? >> that's a great question, of course. especially given the size in fishery in japan. right now it's closed in the effected area. and there was a recent paper not song ago showing that the level in the fish wasn't dropping as quickly as people had expected. and in the trn wasn't expected we know little about the transport of the radionuke lands. it's the first event of the sort and we haven't developed the model or effective tools to predict what the consequences and risks are. so, you know, in terms of the fishery. at the present time, we really dmoant when that fishery is going to be reopened. we know that the kind of
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exposure that many of these populations are seeing are potentially impactive to the populationings. we still don't know really what the potential public health ramifications are in term of the spread of the contaminant as well. getting back to the level of ignorance we have concerning the long-term impact is profound. i would argue we need to be paying close attention to what is going on and how we might be able to predict the future. >> okay. next question is about training and coordination for disaster response. maybe -- and the question is is it sufficient? and it might be interesting to get a response both from the companies' perspective toyota's perspective about whether raining is sufficient for disaster. and perhaps from either
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mr. willard -- >> well, suddenly the lessons you learn from the both disasterrers are, you know, plentifully now in a company. when it happened we have natural and manmade disasterrers in our past. i think -- it's shared by many associations at the same time there are some group of specialists who specialize in this what we call further supply support center. and this work has been going on within our industry, but well beyond that industry. i just give you an example that these group of people are hoping
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for example -- [inaudible] project which is the housing rebuilding project, you know, caused by hurricane katrina. they are hoping to rebuild the new houses. usually it takes about 44 months to build it, but then they help build it much quicker. with the experience that we have had in the past. in two months or stuff like that. a very interesting example those group of people went in to a food -- in new york and holland as free supply. they went to the process control then reduced the wait time from 75 minutes to 18 minute and
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stuff like that. so i think those lessons we learn we have to utilize those to the good of the society. in other words you are not -- [inaudible] this role as a corporate citizens. that's how we see. okay mr. willard? >> i would offer the question of education and trains as a potential lesson here is an excellent one. it is one of the significant lessons from fukushima. we frankly find that there very often training lessons learned from any number of occurrences throughout industry. in this particular case, when you think about the magnitude of the event and the situation that the operators at this particular nuclear site found themselves
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in, it was unpress kented in any of the education and training. i think one of the hess sons is to take that idea of a mag feud event that exceeds what we general design in to our sites and going both educate what defense and depth can really provide and train to the coping strategies in a situation like that that would be, you know, that may allow the level of resilience that may not have been designed in to site in the first place. it's just, you know, this was remarkable in the scope there were courageous operators that remain at the watch at the fukushima attempting to mitigate what happened to them. obviously, in retrospect additional education and training could have only
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helped. >> i'm curious. say what you were going to say. i'm curious if you can address the communication issue with mr. fugate raised earlier. communication was a large part of the coordination. communication with the public and world about what was happening. >> -- [inaudible] training is very important. exposed the weakness. we thought -- [inaudible] countries which must repair for natural disaster. having said that, as i said, you're not going to be fully prepared for this. you're not going to be respond to every challenge in the disaster -- so our focus should
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be not just on the disaster prevention but mitigation. the other important aspect is when you have the disaster of the app attitude, every aspect of your -- [inaudible] policy tested. not just the question of disaster e preparedness. what is important to mainstream the aspect of disaster and mitigation in to every aspect. i think that will be extremely important. and the point of communication is very important. i think no country is immune from the natural disaster and sharing they experiences. and learning from the experience
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of other countries will be a crucial part of our efforts. >> there were lessons learned about how to communicate better what is happening in a situation that is changing on in the minute? >> yes, we can learn lessons. but we as i said we have our difficulties. in terms of the local local government structure. so as i said, -- and in the for the question of -- [inaudible] in trying to share the
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information we have, and the need to not create a panic. it was a very difficult situation. i think we need to -- [inaudible] the experience and try to come up proper lessons. and that certificate still continuing. as long as we're talking about preparedness perhaps you would like to talk about whether there's environmental preparedness. how does it work? >> exactly get ready for this. >> it's the best preparation for the kinds of environmental disasters. i want to touch upon the education issue and mention briefly that, you know, when the fukushima raid logical disaster hit us, there was a great lack
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of educate scientists in the community capable of tackling many of the aspect of the environmental impact. we have a shortage of radio geochemistry and geo-- stemming from the fact that we never thought such a thing could happen again. and so emphasis in the field dropped off. at the moment we really need to train a few more folks to handle these kinds of emergencies in the future. the next question for mr. willard. it has to do with zod's propose the budget consults are likely to have a bad effect on that. >> i think certainly the ability of the nil tear to be mobile, all of the things that the budget contains can potentially
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impact the operability and flexibility of our fleet and forces. let me tell you that response to natural disasters has become fundamental to to our core mission within the military. that is across all the services. not just navy but army air force, navy marine corps. they were part of the mix that assisted in japan during the very large disaster. i think it would be highly unusual to see a lack of disaster response from not just the united states military, but the military of the world. this has become such a central focus in our training, such a central focus in the way in which we're conducting others,
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there has been work with ngo beyond precedent since 2004 where we learned a great many lessons from the large tsunami in the southeast asia and south asia region. so this is very much our core business. but, you know, can budgets have an impact on the degree of mobility of our military, and the answer is certainly. but again, as part of our core business, i think you see a great effort to respond should natural disasters or when natural disasters continue. >> the next question what the current status of the fukushima nuclear plant? >> the immediate task has been to stablize the situation.
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-- [inaudible] in that particular aspect. but this is going to be a long-term enterprise. it will take decades. there is a -- the effected area and the range of political and economic questions. i mean, to start with how to livelihood of those people who used to be -- recognizing the fact that they're not going to be able to go back to the original holmes any time soon. there's a very complex issues of how to ensure that people are properly compensatedded --
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compensated, on top of that there are a lot of policy questions including the question of when -- [inaudible] so it's going to continue to be -- [inaudible] we have time for one more. the question is what is the risk of radio radioactive contain nation to the northwest coast as we've been reading about the debris. is there any environmental risk there? >> we don't know really very much. it's clear there will be trace amounts. because it's the water sable. soulble. the stuff will be decolluded off. there will be little tached to the material that is likely to have large biological effect. that's not to say, you know, there might not be patches that are more contaminated.
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we don't know. the main interest is not the radioactivity but the debris itself and the impact on the activity. >> and related question since it came up so many times, nearer to the event, that some of the radio@going through the air. any environmental risk posed by that? >> you know, it's still a debatable question as to how much it was depositive ited. there was minimal at the point in time. most came in the form of eye don 131 during the event which has a short half-life. whatever impacts there might have been were probably early on. we don't actually have a very good idea. the scope the monitoring there was relatively simplistic and unexpensive enough to guess at what the impacts might. my gut reaction is that's clearly a much smaller risk than
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what happened in japan. much, much, much smaller or as a magnitude. it's not to say it's not important. but clearly on a relative scale it's smaller. >> all right. i would like to say a big thank you to the panelists who came today. thank you for attending. [applause] thank you so much. it's great. just while we're doing the transition if the second speakers can come to the stage. that would be appreciate the. we began with the session on japan today because in so many ways, japan is the best at this. for all of the challenges they faced in japan, over the last twelve months because of the event, one can be assured that every other nation will struggle even more than the japanese.
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our next session brings so much of the issues of cascading disasters and multiple events impacting each other. on a regional -- we look at the gulf coast. there are a wide range of issues ranging from hurricanes and impact they have on the storms impacts. the deepwater horizon spill. today's speakers on this panel are marsha mcnuff the director of the u.s. question logical survey. jeer rome -- i'm pronouncing jerome the executive director
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for the coastal protection and restoration authority of louisiana, and part of the management team of the gulf of mexico alliance, which is a grouping of leaders from all of the gulf coast states. nancy who is the executive director of the marine louisiana university marine consortium. i should also say about nancy that she recently was awarded one of the mccar thur gene yous prizes. congratulations, nancy. and our first speaker is bernie gold seen. i have known bernie for a long time. he's a public health expert. he is based at the university of pittsburgh, if i remember correctly. more significantly for this panel is now chair of the coordinating committee of the gulf regional house outreach
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program, which came from the deepwater horizon settlement. our moderator for the panel is retired admiral thad allen. if those of you that were in the least bit -- during the deepwater horizon event would have seen on the tv so much that he is actually now an honorary member of the media. so we considered him based on his extensive media presence to be an ideal person. not only because he knows so much about the subject matter. he's absolutely great in front of camera. receipt it -- let me hand things over. if lawrence can come to the onsite registration. there is something there for you. it will cause you a big sigh of
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relief. thank you, thad, over to you. >> let me test the microphone. ticks works. good morning. it's a pleasure to be here. it's double pleasure to be here in the presence of this panel and be with the colleagues that are so knowledgeable about the topic we're going cover this morning. they have been introduced to you. i'm not going to do it again. the bios are in the program. i recommend you take a look at them. extraordinary breadth and depth of tal lens and i'm honored to be on the podium with them. this morning we're going to talk about the gulf of mexico. if i can maybe do a couple of scene setting remarks and pass it to our panel in a certain sequence. i would like to you to think for a minute about what converges in the gulf of mexico. i think part of the uniquenesses of that body of water and every body of water in the world can claim a uniquenesses, is the
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extraordinary natural environment that exists there with the habitat and the ego system. if you look at the con fliens of great water, the mississippi river, the states of florida, the yuck tan channel. you look at the biodiversity as well as mexico you look at the challenges between what i would call the interaction of the natural world and the manmade world. it's an important part of the world but a very complex part of the world when you bring in the economic and public infrastructure down there. what you get as we an increasing population and expansion that supports that population. you have increasing interaction with the natural environment. greater doge of complexity, we start to introduce concepts like climate change and conditions of uncertainty, the level of the
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types of events that can occur there in terms of the order of magnitude and the consequences grows. we know the frequency is increasing. and today we're going talk a little bit about the unique area of the world from a couple of different perspectives. i would like do you think about a couple of things as we do that. the first is overriding concept of resiliency. several months ago they produced a national report on resiliency. national imperative action in moving forward and how to think differently and the interaction of the human built and the natural environment. having done many months in the gulf on several different disasters and crisis that were down there, i come to think of resiliency as similar to the human immune system. the preexisting conditions are not created by the event but to the extend they are present.
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they are exacerbated and magnify the consequences of what is going on. i think resiliency i go beyond what we do to mitigate structure and talk about social capital and talk about vulnerable populations. talking about how we create supply chains after the events occur and how the infrastructure can help or hurt us. the resiliency of the infrastructure everything that allows us understands that an event occurs and react to it, move on of the the event -- after the event finished and learn how to mitigate the chances it will occur again or the impact should it occur. with that in mind, we take couple of views of the gulf as we move forward and going to be interested in carrying on a dialogue with you all. let me start off first with nancy. again, the bio is in the program.
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i won't repeat it. i learned today she has been awarded mcarthur prize. i i would like you to congratulate her. [applause] >> you have the microphone. >> thing. no, i'm not buying you lunch. that, of course gulf of mexico is extremely productive in dynamic system. a lot of that as thad mentioned is driven by the mississippi river, which is 41% of the lower 48 states. it has a major influence on the wallet quarter and the -- water quality and -- resulting physics -- i'm sorry resulting high productivity fisheries and other economic resources such as oil and gas. geologic time, the river, high
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carbon, and oil and gas for the area. the area is also subject to what we in science call multiple stressors. sometimes they are multiple insult as well. again, these red light con influence -- con influence of how how many and natural processes ongoing. there are a couple of highlight national problems in louisiana including the low ox yen area shawf show. sometimes called the dead zone. the high land rates in the area. the con influence of the oil and gas industry with the social structure that also depends on the living resources of fisheries. a lot of natural dynamic, the delta plain is continually changing and wants to change all the time even if people don't want it to change.
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local areas subject to sea level rise. substantiative of the coast, and of course, seems like always hurricanes that impact our coastal system so dramatically. the other issue is long-term sub -- it's a some thing will change no matter what we try to do. there are going to be many issues facing us as we go in to restoration of the area with funds from the restore act and the ideas that this should be based on the knowledge that we have accrued over the years that it should impact both -- e affect and benefit the well being of the natural system and the human system. and that we make wise decisions and ultimately do no harm to the system in the process. >> thank you, nancy. next we have we are any gold
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seen. as a buoyant of interest i'm concluding a job right now as co-chairman of the respond commission for governor cuomo looking a the new york state response to hurricane sandy. some things that have crossed my view and some of the issues that i've dealt with had to do with public health and occupational health and safety and how you deal with large populations and how do you bring a response force and put it in an environment and make sure the safety and health may be contained while trying to do that. bernie, we look forward to your comments. >> thanks. i'm going to speak about a specific program that has been developed with the goal of i are sill yens related to public health and troy to raise the issue briefly of the interface what we do in public health and the concept of resilience we've heard as they both said, there's
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a very unique situation in the gulf. we would add there are unique group of people with relatively important health needs. the states, the areas tend to rank in the 40s among the 50 states and just about any health care or rather than health care but any health ind.a. cater of general health well being. we're dealing with a population that is not had great access to health care. it doesn't have a strong public health basis as it needs. and as the rest of us have access to and as you know, we in the united states are not the healthiest people in the world to start with. the group is called the gulf region outreach program. it's gull to exhigh quality --
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health care services including primary care, behavior and mental health care and environmental medicine in the gulf coast community. the developed jointly by bp and the plaintiff's council. it's part of the $7.6 billion settlement you've heard of. it's $105 million which it may sound small in terms of health care resources for community in the area it's very significant piece of money. which didn't include this. ly immediately put a disclaimer on there's one month which an appeal can come through and could change things. we feel comfortable about going forward with what i'm describing which has been under way. the beneficiary -- underserved
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community in l.a., mississippi, alabama and the florida pan handle and the ones living along the coast. there are four component to this. the first is a program serving the being improved community health programs, it's run by the louisiana public health institute jointly with the alliance institute which is a community-based organization. there's a mental and behavior program which has louisiana state university, southern mississippi university, university of south alabama, and university of west florida. there's an experimental health run by a university including a washington-based group. the american occupational health clinics networking which is based here in washington. that's got the literacy as both
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at the lit sift community and the literacy and the degree of community workers and those involved with community activism. community projects. as well as let sei of the health care community which is not always of the highest when it comes to environmental issues. and finally there's a community health worker training program that is based at the university of south alabama. the overall goal here where resilience comes up all the time. the resilience is very much in keeping with what we would do in public health. yesterday there was a meeting held at epa by epa concerning resilience. you hear presentation from joseph and allen and others later in this conference to the outcome of it. i was very much taken by a couple of comments. one by lance of emmerson --
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emery who said systems evolve to a point of diminished resilience. think of that in terms of individuals. what we're describing is evolving to the point of aging and that's really what we have done. you mention the immune system. i hope you have flu shots. right. but those my age range need the flu shot than younger healthier people. because we are more at risk. the whole risk issue of individuals, the vol nebility issue is what we deal with in public health of trying to improve the ability to respond to problems. we think it in terms of primary and prevention being you already sick and going to the dock and the doc tells you they have the side effect. we prefer the primary
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prevention. we see resill yeps of primary and secondary toward making sure problems don't happen. this will be a five-year effort. it's not research program. it has a strong evaluation program to it. we hope out of the approach we will learn more about the resilience of communities in relation to being able to deal with health -- dealing with a social capital that plays a major role in community response. how can that be built up through working with the public health infrastructure and working be communities to improve health resilience? >> thank you, we are knee. i think we could agree it's been pretty tough last ten or fifteen years from the state of louisiana. at the open center a lot of issues we've taunted whether they're related to the demographic, the characteristic of the community or the agree
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graphical location in term of the environment and the has habitat of the area but also at the entrance to one of the great major water way of the world in which there's so much economic traffic we depend upon. so next we have gary. who is the executive director of louisiana coastal authority. i want to thank him for the work he's done when i've been done there. >> thank you. it's better to see you in pleasant circumstances. speaking we life in south louisiana. if you think resilience is the key. try to stay healthy with the food we have access to. when you're talking about in term how we address the i are sell yept sei and the issue we contend with the in the vulnerability in the coast and try to tie it to the tax base
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and locate it from a regional perspective but also a national perspective when you look at it. 30% of the nation's gdp comes from the gulf coast. if the five gulf states were a nation it would rank seventh globally. if you look the population increase there's been 109% increase in the population in gulf region. nationally about 52%. the people are there. the vol nebilities are will but also the significance in terms what it provides to the nation. i think from the state's perspective and also from the gulf we recognize that healthy echo systems also can mean healthy economies. and from louisiana what we have taken, what we believe is a very good first effort in addressing both the vulnerability that exist with the state's master plan has which is is a long-term
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plan addressing the ecological but reducing the risk across the coast. we believe we can achieve a 100-year protection for the community it's the resources that important. the ecological resource that's state provides and the gulf provides to the nation that if it's going to be afforded through the nation it has to provide protection to those communities who provide that. we believe that this plan we can have sustainable long-term healthy echo systems but also healthy communities and economies. there's an essence a form of what we call social engineering. if you can't ensure the communities, the supermarkets, the schools the things that community depend on, they will not survive. we want to make sure that we're developing both a healthy echo logical system but -- we have gone a long way in first attempt. it's not perfect. we have a plan to achieve that
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sustainability from an economic perspective but present ghtd the communities long-term that are critical not tonight region but the nation. i think it's something we're working with the other gulf states in light of what happened with the oil spill and utilizing unfortunate they event will provide some opportunity from resources as it obviously won't be enough but putting the resources as he said making sure that we're putting them to good use. to mitigate from the problems we have experienced but also thinking long-term to address those problems but also mitigate the risk and reduce the risk to protect the echo system and the economy. >> thank you, jerry. i think you look at the breadth of the topics raised thus far, it's easy to understand the term come membersty and -- complexity. i think we fail to understand that the issue whether they are crisis issues or long-term very difficult complex problems are usually beyond the bofnedz any one particular agency,
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organization, private sector to solve on the own. and the need to work across boundaries in addressing these problems or black swans whatever you want to call this is a common feature required in leadership today. marsha is the director of the u.s. agree logical survey has worked with me for many, many occasions. almost notably during the oil spill and you're looking to one of the fine leaders in government that worked across the boundaries. in the case to make science matter. and making difficult decisions during a crisis. i'm proud she worked with me during the oil spill. i'm proud to introduce her now. >> thank you, admiral. as you've heard, the gulf coast under multiple threats. i want to speak to those that impact life and property. it's a deadly combination of loss of natural -- rising seas from global warming, increasing
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intensity and number of storms, and more people and critical infrastructure that lie in the coastal zone in the path of those storms. there's no doubt what the coastal zone is a disiecial but dangerous place to live. and it's getting more dangerous all the time. with a is the solution in the good news is that research can help. and let me provide you with an analogy. we know that fault zones are also a very dangerous place to live. and yet thanks to science and engineering, we have influence -- creased by more than two order of magnitude the -- earthquake country. the fact recently demonstrated by the differing experiences in death and destruction in haiti where earthquake resiliency is
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nonexistent and in chile, a model for earthquake preparedness which took the play book from california. so that's why i'm optimistic that science and engineering can also make the coastal zone a safer place to live. but of course, there are important differences between the problem of earthquake hazards and that of coastal hazards. now if we put aside far minute the bumper stickers that say stop plate tech tonic. one -- humans have negligentble effect on the rate and the effect of the intensity of earthquakes. on the other hand, we have increased coastal hazards by increasing the rate of wetland loss and barrier island i rogues and -- erosion and sea level rise. what it means is that in addressing coastal hazards we
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need confront both mother nature and the enhanced risk from impacts. never the less, i would argue the philosophy we have to approach it with is exactly the same. nists can make recommendations on issues such as what is the recurrence rate of the threat, what are the effects that the threat posed to our lives and our property? and what actions do we need take to mitigate those threats? engineers can take the input from the scientists and design appropriate structures and carry out the mitigation projects. in the earthquake case, it was then nut to the -- put in the hands of local communities to voluntarily take those recommendations from the scientists and engineers and cod fie them in to building standards and zoning and with those actions that ultimately
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saves lives and property. i expect that a similar approach would be appropriate in the coastal zone. now the settlement from the oil spill provides an opportunity to give the coast in the gulf a new lease on life. to fund the science in order to do the right things, and the engineering and in order do the things right. we should not squander the opportunity on projects that won't make a lasting difference. thank you. >> thank you, marsha. one comment that kind of crosses the discussions that occurred thus far. the notion of communicating the conditions that exist today. the importance of resiliency where we can have an impact and changing the behaviors. i think marsha will be the first to admit that starting with trying to protect school children in california has
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resulted in statewide program now where annually there's actually a drill that brings in the community. it started with school children. we need to learn how to have a larger conversation in the country about how to understand the issues and communicate them to the public. there's always risk communications, there has to be a -- understanding of the behavior that are needed to mitigate these events before they occur. and going forward i think that's the next important national conversation we need to have. now i saw somebody collecting some question cards and he's running up here now. >> in the long-term can there be resiliency in sustainability in gulf echo systems with the population growth? jerry, you want to start? >> i would love to.
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again, there's never going to be a silver bullet fix it and forget type of solution to the problem. dynamic environment is doing to take a i did nam incompetent solution. we believe again addressing those things that we can achieve sustainability, using the river, using the things that belt the data, mitigating the risk building stronger for communities. we have demonstrated we can. ..
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>> a loss or reducing risk translates from depending upon what you look at, $11 up to $30 per dollar in investment, and there are things that we can do proactively that will reduce that risk, both create stainability for communities and stainability for the ecology as well and those resources. i know in the master plan, it's laid out and it's a plan that continues to modify and tweak, but it takes a dynamic approach, but the answer is, yes, we can do things that allow us to survive and live on the coast and sustain that. >> nancy, maybe you can address a facet of this. there's a discussion after one of these events occurs about what to do going forward in places like plackman's per rich or the mississippi river for there's 40 mile stripe of land that's a quarter mile wide with river levies on the front and private levies on the back.
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how do you have a public discussion on is it the right place for people to live? >> certainly. as more and more people come to the coast, more and more people want to live on the coast, i think we have to take a very strong attitude about where people can live and where they can't live. there were floods on the mississippi river in 1993. they moved towns out of the floodplain, but they are building there again. it just doesn't make sense. the state of texas has been very proactive in claiming state waters after what was land, has become open water after several hurricanes. we need to protect the people that are there. we need to provide alternatives for them if it looks like their homes are going to be underwater. the lab where i work is outside
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of any levy system, and the water level gets higher and higher with every hurricane we've had, and we all know we're going to have more. we have to think into the future and not 30 years because we just have to take care of the place where people want to live and provide the safety for them at the same time. >> any other comments? i'll go to the next question. you can lead off with this one if that's okay. >> sure. >> would you comment on the progress on implementing the post-. post bp plan, and are there institutions in place to designate projects and monitor their progress? jerry, you can follow-up on that. >> well, there certainly are institutions in place, and there are plans in place.
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there have been entities designated in leadership roles, and there have been plenty of good ideas put forward. i think maybe jerry can comment more on what the progress has been on those, but i think that some of the principles i've seen put forward, i think, are excellent. for example, just to comment on one of them that i'm very much many line with that to the extent that we can restore natural processes. for example, during the gulf spill, the governor of louisiana, i think, you know, his heart was in the right place when he wanted to construct some barrier islands in order to
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hopefully stop oil from coming ashore, but the problem with it was unless you restore natural processes to nourish those barrier islands, it was going to be a very expensive undertaking that was going to be very short lived, and there was the chance that the construction of the islands was going to do more harm in the short term than the long term effect of the islands so in the projects that are being proposed, they have a sound science underlying them which has, at its foundation, that natural processes have to be at the -- underpinning these such that they will have long duration that the -- that the restoration will continue, and you don't just build something to see it all go away again. >> i think there was some
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science in the republic that the berms, themselves, were trying to achoaf -- achieve what the natural system would have achieve, blogging the oil before it's in the system, and the intent was there. there are programs. we are trying to achieve a connection to the river which essentially established the delta. in the oil spill, we also opened some of the limited diversions, just small diversions, which had a beneficial impact, but insignificant in terms of our ability to rebuild or build to the delta was insignificant. we're proposing long term, sustainable diversions that will have a significant impact to rebuild and sustain the coast of louisiana, but i think part of the issue, too, in regard to the question is also trying to address that the disconnect we currently have between, you know, the largest unfunded mandate the nation faces outside of social security is the liability with the national
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flood insurance program, and we're going to have to address long term how we're going to continue that program, but also the disconnect within the agency that carries out a lot of the programs which is the core of engineers which is responsible for achieving some of those protection measures, and the process you have to go through to construct and build these protection measures, laborious, a process that needs to be changed. there's a myriad of issues we can undertake to increase resiliency and reduce and mitigate for risk from an insurance perspective and other abilities to protect the measures. in addition, the natural system is critical from the gulf per perspective, protection from the communities themselves, but also sustaining and protecting the ecosystem, and we can, and there are plans to achieve that benefit. >> and i think also, one final comment on this, is restoration, all of the projects are by necessity going to have to be a compromise between the existing
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economics of the gulf coast and the ideal in restoration because we have the oil and gas infrastructure and we have the requirement to maintain the shipping channels, and so there is the -- the ideal in restoration would be to allow the mississippi to continue to meander the way it did before there was any attempt to control the river, and there was the much lower loss of wetlands before there was all the development in oil and gas. we know that we will never again go back to that totally natural state, and so where do we find the dividing line between the
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appropriate amount of restoration that will get us back to those natural states that provided more sediment delivery to the coast and more natural protection for the wetlands, and yet provide the economics for the coast in terms of the shipping channel and the protection from floods and the oil and gas industry that we know is also important to the people of the gulf. >> it's a risk of plugging a book here, when i was working after hurricane katrina, every time there was a person coming into the staff, there was a book called "rising tide," help me with the author there -- >> john berry. >> john berry. the history was how the mississippi river was changed for accommodation in the impact of the 1997 flood that created the conditions in the hurricane
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cay katrina. i recommend that. what would you do to help develop resiliency in low income and rural communities we know will face disasters, especially in regards to hydrofracking. >> yeah. >> you have not been asked the hard question yet. [laughter] >> that's a very good question. you know, from a health point of view, what i would say we learned from the gulf and from similar disasters around the world is that it's really primarily a cycle social impact and hassed to with loss jobs, fear of chemicals, a whole series of things that are fixable if we can improve our communication skills, our knowledge, and our willingness to share and tell the truth, and to me, one of the most telling problems that came out of the gulf was the issue of the
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dispercent. if i ask for a show of hands like i do in the gulf, how many heard of dispercent, everybody raises their hand, how many are concerned about the fact there was a secret ingredient as part of this? everybody raises their hand, and then say, well, i'm not going to ask for a show of hands now, but how many of you have taken an over the counter laxative? turns out that secret ingredient, that confidential business information is the most commonly sold laxative in the united states over the counter. it is no reason not to tell people about from a point of view from a toxicologist, i'm not really worried about what human exposure to that particular chemical, and i'm not sure what it does to the sea, that's a different issue, but there's no reason to have people frightened because it's a secret thing, and there was no reason for the secrecy, but it was
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secret and impacts, and we're getting the same thing, and we're getting a bunch of confidential information, and what i find fascinating is that issue that confidentiality is the stuff that's coming up from underground. new laws in colorado, pennsylvania, and ohio which do release information about the hydraulic chemicals, notwithstanding, we don't have to tell you about anything we bring up from underground. that's dumb. that adds to the fears, the secrecy, and the concerns. i'm not saying there's no toxicology effects in the gulf, but reviewing that with my colleagues and previous gulf things and submitted to the new england journal of medicine, the reviewers were concerned we were not saying enough about how many people would get leukemia from ben zen from the spill, but the psychosocial effects are real.
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we have to work on communicating that with the public. >> i have a leadership observation. in the events i've been involved in, i've always tried to use the standard of transparency as a way to deal honestly and forthrightly with the public. the problem is if you inadd veer tonightly create the impression that you did not knowingly and contemporaneously disclose information, there's a discredit with the public, and sometimes it's difficult to dig out of that, and it's difficult for organizations, especially in a crisis response, to think about just releasing the information before it's asked for and remove the information. before the information was understandable and mitigated concerns, but because of the way the companies and the government worked, it was difficult to make that transparent, and catching up with the american public is really, really difficult.
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>> nancy and marsha, we talked about this with jean jane a lot. one of the impacts we have was the lack of information on the background presence of hydrocarbons as a baseline understanding there was a change. in the context of moving beyond the bp money, what do you think the larger ajen da should be about. first nancy and then to marsha. >> actually, the hydrocarbons in the continue thenal shelf and inland areas are well known. it's the deep sea we didn't have good information for to i think that the deep sea ecosystem with drilling going deeper and deeper is an area that we need to emphasize along with the system that overlies that, and some of
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the longer lived organisms like the tuna or marine animals. in short, one of the issues is, again, the effect of multiple stressors. we have march areas that were heavily oiled and some are not there anymore post hurricane issac because they just got peeled away. they were in such poor health so the idea of the multiple stressors that work on a has habitat, and then the social system that goes with that, i'm currently on an nrc pam on the effects of the bp spill on ecoservices, and 23 you want to repair the system, you also need to know how the ecosystem provides those benefits for well being, and that's a very open area of research right now so i think that's one area we need to look at. >> right, so it focuses on the
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economy, this is the effect of the multiple -- the multiple stressors on the system so that we can understand what one more impact would be. another thing that i've seen come up time and time again was after the oil spill, there were concerns that would come out of the fishing community with the recreational or commercial of sometimes when they would notice that there were ab normalities in species that would be found in some catches, and they
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wouldn't know whether they could positively attribute it to effects from the oil spill or from dispercent because there were not good baseline conditions that had ever been taken before the spill. i think for important ecosystems, whether they are the gulf ecosystem or the california current ecosystem or any other ecosystems, the arctic ecosystems, we need to have baseline conditions of what are the -- what is the state of the health of that ecosystem, and what is the occurrence of abnormalities before any untowards event occurs. >> can i add to that? the long term data are
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incredibly important, and we also need to continue monitoring observations in the area to learn more about the ecosystem. there's a lot of contaminants, information in the marshes and epa's e map program, muscle watch, and a lot of background information. the unfortunate thing is that you never have the opportunity to know exactly what's going to happen in a place that you have not been monitoring, and there has to be some strategic decision on how to pick the places. we need a model condition that you can spend time on just a particular area maybe to learn more about how it functions and translate those results into other areas as well.
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>> i have been recently involved in operations in the arctic and serving on a presidential task force in antarctica. there's a latency between human activity and our ability to understand we need o baseline the data in the area they operate in, and we always come in after the fact and try to establish what we think the parameters of the baseline data are for that system. i don't know how from a public policy stand point you get the match set up because that involves a complex crosswalk between the private sector and the responsibilities of government and the regulatory agencies, and, actually, extends into the international environment making it more complex, but let me use that as a segue for might be the next question. we know and hear about the economic impacts repeatedly and hear about it from the media and business, by who speaks for the environment and how can we keep that voice from being drowned out as a result of the difference in funding relationships? maybe i can throw that policy question back to the group here. how do we close that cycle of
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latency in trying to understand where we need the information when the economic activity is proceeding, and then we start with the marseilles shell if you'd like. >> i want to start with the comment you made can which i found to be fascinating that there's between $11 and $30 for every dollar spent. well, that, again, putting on the prevention cap, that's worth of pound of cure. it's a 16 #-fold ratio. we know that. our policy has to put that in place. the point made about human activity and a baseline, of course we do, and of course the only thing forcing that baseline now is either smart companies understanding that they are going to be sued and it's the lawyers pushing them for anything that's found there, and they might as well get a baseline because maybe the baseline will show that they started with dirty water because we've had plenty of previous
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activities beforehand, but there's no concerted effort unless they get the resources with the ability to do it to get that baseline which is, and it's clearly coming at us. we know we're going to drill the entire northeast over the next couple decades. we need that baseline. we need it desperately, and we need it for human health as well because assurety for the areas, there's a lot of communities, lots of different kinds of diseases that come in clusters just by a statistical chance. when there's a group of kids with autism or adults with cancer, someone points and said we didn't have that until that drill rig went up there. you need to have -- and at that point, of course; it's in the media. you get the lawyers involved. you try to do a retrospecktive exposure inspection, but you can't, too hard, litigation has it tied up. we need to have a baseline study that includes not only your ecosystem, but includes human health parameters so we can see
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if there really is a change. >> jerry, did you want to say something? you were leaning forward. >> quickly. for the environment, it's upon us to place value on the ecosystem services, and the doctor referred to that too, but there is a value to the ecosystem and resources that depend upon ecosystems, and i think we need to address and speak to the baseline is what that value is, you know, swamp people and duck dynasty aside, there's a value to the ducks and the fisheries, all things that are important we depend on from a resource perspective, but have a value, and until we develop that appreciation and use that as an economic tool as well, it's going to be important to assess that and use that in how we're going to send that message. >> thank you. >> nancy, this is for you. how confident are we about the causes of the gulf dead zone? where the problem originates, and what with ce -- and what can we do to fix it?
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>> did i plant that question somewhere? [laughter] yeah. the scientific consensus is that increase in nutrient loading and phosphorous led to increasing to the area that's getting larger, and sometimes more severe so there's a direct linkage between what happens in the water shed and what happens in the gulf of mexico. whether it's sediment, nutrients, contaminants, e. coli, it all affects the coastal system. the -- so as far as the science, it's very clear. these changes have happened in the ecosystem in our recent past, not over geologic time and did no occur at the turn of the last century in the early 1900s, and we know that from geologic
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records. we're really confident, and we know that there are multiple sources of both the phosphorous, and the issue is to generate the communication, the education, and the willingness for both political and social will to make some changes in the water shed. many of them directed at agricultural practices because the usgs water resources determined that most of the nitrogen and phosphorous come from those resources, but also make their land use and land architect changes to be made in artificial wetlands, allowing the floodplain to put the nitrogens away for us before they get to the gulf of mexico so i think science is strong and identified ways to move forward. it's getting going basically.
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>> going back to marsha's comments about the control of the mississippi river. i think what you have here are multipliefer effects that -- multiplier effects that were not intended at the start. when you made a navigation channel to keep it dredge and allow ships to go far up the river and barge traffic down there, you made a majority of the volume of the water come -- combined with the affluence and chemicals for agriculture, shoot that into one place and keep puts it there. we have combined effects of decisions sometimes made a century ago. >> other issues on the mississippi are occurring right now with the low water, and people want missouri river water to come into the main stem, but all of the dams and reservoirs on the missouri is where a lot of the sediment that should be getting to the gulf of mexico is now stored. there is a lot of competing
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interests for the use of this major distributary. >> we're about out of time. one question just to clarify regarding a question from the audience, the $1 and the $30, if you have the source? >> depends on what parameters, but upon risk reduction measures, flood reduction measures that would have been in place or have been in place that equated in terms of reduction in risk, for example, the 14 billion invested after katrina in the new orleans area equated to a substantial amount of hundreds of millions of dollars that would have been experienced or realizedded during hurricane isaac if not for the measures put in place. it depends upon what you look at, but it's primarily associated with looking at investments that the federal government has or could make in reduction in terms of that risk and what it translates to in the benefit that it would provide.
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>> thank you. i'm going to combine a couple questions asked in the same area for the panelists to comment on as we close, and that's given the things we have talked about here today, the vulnerable population, increased population density, issues regarding resiliency, is there a threshold at which we should reconsider rebuilding after eventings like katrina or the storms encountered, and, jerry, start with you and work our way back here. >> essentially the question was should we rebuild? i think, honestly, from a local perspective who lives there, yes, we should, but i think it's not only from the local perspective living there, but frustrate national perspective. again, in terms of the resources and benefits it provides for the nation, but, also, our ain't to sustain those resources and provide resources to the nation affording the communities who provide those resources do deserve and want protection, and i think we can and demonstrate
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ways that we can build smarter, build more resilient communities, but we also can build and rebuild the ecosystem, provide that natural buffer. again, utilizing the mississippi river, the tool, the thing that essentially by letting the mississippi completely change the hydrology and the building of the dell that is effectively cause the precipitous drop of wetlands that we experienced in 1930, we get it from sea level rise, and the plan put together recognizes that, went we believe within the next 50 years we can in coast call louisiana, and fort most part throughout the gulf region, develop a plan and way to create a long term sustainable ecosystem and a sustainable coast that provides resources to the nation. >> this is -- i like my job so this is where i pass the microphone on fracking. [laughter]
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not really. i already stated we have to make hard decisions on what we can do and what -- especially what the mississippi river can bring to us, both good and bad, and think about the future and take care of the people in some way, some farmers have suggested that shrimpers in the gulf of mexico should just find another way to make their living. that doesn't sit very well with me or probably -- >> no, not at all. >> i didn't think so. or anybody else, but times are a changing, and we have to be able to keep up with it and an anticipate it. >> the question, i think, is there is a threshold as i heard it, and so i put my tox toxicologist hat on, and, of course, there's a threat. you can't move a hundred thousands people in there in the next year without destroying
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everything. there is a level that you can't keep to it, but it's the threshold, again, thinking as a toxicologist in the system in which there's vulnerabilities that change over time, and so what that threshold is, and i would not come close to guessing what it is, will depend upon vulnerabilities and resilience, and that's, i mean, that's basically how much you can be able to build in the gulf is dependent very much on how resilient you're going to be and how you can put it in resiliency that's needed to be able to go about doing things we need to do so farming and shrimping can occur. >> okay, well, i'm going to speak right now as an earth scientist with the perspective of deep time, not the directer of the usgs because as the director of the usgs, i should not tell anyone what to do.
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okay, someone with the perspective of deep time, this is how the earth works. people should not live below sea level. seas are rising, okay? here's what happens. it is not the gradual rise of sea level that's going to get anyone. it is the combination of extreme events superimposed on the garage rail rise of sea level and those extreme events that destroy our natural protection, and here's what we saw with superstorm sandy. that there were some amazing predierkses done by hillary stockton who is a scientist with the usgs who looked at the barrier dunes along the northeast coast, and she predicted "x" marks the spot
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with amazing accuracy of exactly which dunes would be breeched and where the storm was going to be right through in hit the coast because of how good the models have become. them she did another prediction after the storm. because of the loss of the barrier islands, because of how much they eroded during the storm, how much protection they offer now going into the future for future storms, and it turns out that for the next storm, even if it's not a superstorm, even if it's a run of the mill nor'easter, the number of breaches and the amount of inland coastal flooding will be widespread for the northeast because of the loss of that protection.
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we have crossed, already, a threshold, even though sea level has not increased a lot between, you know, last object and now, just because of superstorm sandy. sandy was a threshold for the northeast, and we crossed it. >> marsha is heading back to california after distinguished service at the u.s. geological survey, so i want to congratulate her and thank you for the public service, and i want to thank everybody on the panel, so thank you. [applause] >> thank you, a phenomenal session and really wonderful insights.
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>> host: back with the house of ways and means committee, a democrat from michigan, you made knews yesterday. you said that you are not confident that tax reform will happen in 2013. you're hopeful, but not confident. why? >> guest: well, because so much is happening. you know, i was thinking about it in a way that republicans threatening to use the debt
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ceiling relays everything and puts the perspective, i think, in the wrong place. i think it's a serious mistake for them to even think about that, and we were talking earlier about the articles this morning saying how dangerous it is to use the debt ceiling to essentially put the full faith and credit of this country in the real jeopardy so i am very concerned about the consequences from doing that or even threatening to do it immediately and, also, it really shifts the focus and instead of it being on the debt ceiling, including tax reform. >> host: okay. so tax reform doesn't happen in 2013. >> guest: it may not happen. >> host: may not happen. what's the impact of that? what's the implication? >> guest: i said all along it's important for us to look
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beyond the label tax reform. for example, we are urged early on tax reform to bring the rates down to 25% individual and corporate. without indicating how in the world you would do that, and some said, well, we can use the exemptions in the deductions. well, we've already begun to use them. i hope in an effective way so i think we need to go beyond the rhetoric of tax reform and talk about what the substance of it would be, and, again, the problem, one of the problems with this effort by the republicans to escape the reality, we cannot use the debt ceiling as a weapon, as i said yesterday, it's not a weapon against the president politically, but it's really against the people of this country because the consequences of the default would ripple throughout the economy of this country. i just saw yesterday an article that said the people are now --
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they are now drawing on the retirement funds. the middle class of this country, and so we now want to have a debt ceiling threat that would cause further erosion in the stock market, that would essentially have things begin to go haywire, and so i guess the republicans are going to be thinking this weekend how they proceed. i think they need to proceed with sensibility and common sense rather than an effort to be so extreme that you threaten the economy of this country. >> host: house republicans leaving for a retreat tomorrow to discuss -- >> guest: i hope they -- >> host: to discuss options. >> guest: retreat from the idea of using the debt ceiling. >> host: you referenced a "wall street journal" article that some in g.o.p. don't pay all the bills now. if we were to -- if the congress were not to raise the debt ceiling, some republicans
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believe such an event would be manageable in the short run, at least, they say, they won't vote for a higher debt ceiling until democrats accept spending cuts. many see this as risky. one said tuesday he would introduce legislation next week instructing the white house to prioritize the government's bills. what's wrong with the idea? >> guest: two things. first of all, we've had some deficit reduction. the president laid out a couple days ago. we had over $2 # trillion. we had a trillion and a half that came from previous actions, and then we added just a few days ago some further deficit reduction through increased taxes on the very wealthy of this country. we already begun to undertake deficit reduction. to use that as a reason to use the debt ceiling as a weapon is really playing with fire.
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they say pay some bills and not pay others. we've never tried that before. >> host: is it feasible? >> guest: i don't think so. which bills? social security? veterans? people out fighting for this country? which bills do you pay? we never tried that. i think the president put it so well. this is not a debt beat nation, really, and i think common sense is likely to prevail within the republican ranks. i know, if i might say so, if not firsthand, second hand, that the leadership within the house republican caucus, not all of it, i think some of it realizes that the potential consequences. >> host: if president obama won, so to speak on the fiscal cliff deal and got taxes increase, able to get new revenue, then why not, as
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democrats, agree to some spending cuts that republicans want? >> guest: well, the president made clear that there has to be, in terms of what's coming, there has to be a mixture, a balance between cuts and revenues. in terms of the sequester, we're going to have to have a blend, a balance, and the president has said that, and we said that, but to say it's only spending cuts, and there will be no more revenues is not feasible. i looked over the discretionary spending charts, and now the way we're going in terms of the percentages gdp, what we spend on education, what we spend on health research, what we spend on so many of the necessary programs in the country is going to go down. the trend line is already there. what the republicans are
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essentially saying is push it further. further, have further consequences in terms of health research. does that make since? do the american people want that? the answer is no. we have to have balance. the problem is within the republican conference the house is there's too much inbalance. >> host: okay. do you agree with 24 from the "wall street journal" editorial yesterday. "even if they tax 100% of every dollar earned by every american who earned more than $500,000 in 2010, the feds take in $1.29 trillion, not much more than the entire 2012 deficit." >> guest: no one ice suggesting relying only on taxing the very wealthy. that's a sham target. no one is saying that, but let me point out if we look at what's happened to middle income families, an i mentioned what is happening with the 401(k)s,
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dipping into their retirement on a rather massive basis, in 2010, the top 1% received over 90% of the income growth, and i represent basically a very middle class district, and i know the effort in some cases, the struggle to stay above water, and so all we're asking for is balance. >> host: okay. so on the spending side then, would democrats agree to raise the eligibility age for medicare? >> guest: now there's deep hesitation, and i suggested in terms of medicare, and i said this yesterday, and i talked to the chairman of the committee, we need to sit down and look at medicare on a bipartisan bicameral bays bay -- basis with the white house and the president included. two things happened with medicare in the last couple of years.
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number one, the rate of increase has gone down. it was less than 1% last year in terms of medicare, and so there is a reduction in health care inflation to medicare. secondly, we have health care reform, and hhs says that one of the reasons that there's a reduction in the rate of increase in health care costs is because of health care reform, and health care reform and a number of us work hard to make sure there was in it some instrumentalities to change from the present, reimbursement system, fee-for-service, which i had family personal experience with. it is not effective. it's not understandable. we need further reform of the reimbursement system. we have to sit down on a bipartisan basis. i think raising the age has major, major problems with it.
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we ought to sit down and talk about all options. >> host: is it a no on raising ages? >> guest: i'm very hesitant to do that, but we have to sit down and look at the entire medicare picture. >> host: open to some changes to medicare? >> guest: well, i think we should look at it. we have made some in health care reform. we had major, major changes in terms of medicare and in terms of the provisions for the providers. over $700 billion worth. when republicansment to talk about spending, we already talked about spending. we already have gurnet take -- undertaken major changes in terms of spending, but all they are saying is it's all spending or over the cliff. that is such a serious threat to the economy of this country, and you, i think, saw in the clips this morning that credit agencies are saying once again
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that the credit of this country is threatened. are we really going to put in jeopardy the full faith and credit of the united states of america? >> host: i want viewers involved, but the credit agencies said you have to address spending. >> guest: let's agree. >> host: okay. >> guest: we talk about balance. it's balance versus inbalance. balance has to win. displs all right. getting the viewers involved. junior in harrisberg, virginia, independent caller, hi, junior. >> caller: yeah, one thing, why are you telling us stuff that you know is not true, and another thing, too, when are we going to see a budget out of this administration? when will we see a budget from this administration? everything you said is untrue. we know it's untrue. >> host: junior, what did he say specifically that's untrue? >> caller: talking about the budget, blaming the republicans. where is it? four years we've been under this
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trillion dollars. >> guest: junior, junior, the administration presented a budget every year. not correct they have not presented a budge. we're deadlocked within the congress in terms of our ability to pass a budget through the house and the senate, and the house presented budgets that almost no democrat could vote for. i think that the people of this country would not agree with, and the senate, which has a 60 vote requirement has been able -- has been unable to find common ground within their ranks. they have rejected the house republican budget. it's not correct to say the administration has not presented a budget when it has. >> host: what about the senate? >> guest: it's working on another one. >> host: senate democrats? >> >> guest: because it takes 60 votes, and the senate's now considering how to get out of that tangle that requirement,
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but junior, look, i want to have discussions, and i think it's important to get to the facts, the fact is the administration has presented a budget, and they are working on another one right now. >> host: tim in michigan, democratic caller. hi, tim. >> caller: hi. >> guest: where are you located? >> caller: by pawpaw. >> host: where's that? >> caller: west. >> guest: west side of michigan. >> caller: deep in republican territory. >> host: okay. >> guest: they grow grapes in pawpaw, don't they? >> caller: as far as i know. another subject there. >> host: exactly. tim, go ahead. >> caller: these people republicans back up. they can sit back and wait because they have the money to do it. all of these things that are going to happen are going to come down on poor people, and let me tell that fool from virginia that's a republican that when he runs out of money,
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those republicans aren't going to want to know him anymore either. >> host: tim, you're saying this comes down on middle class americans, references if the debt ceiling 1 not raised -- >> guest: middle class starts at $70,000. what about the people making $40,000? >> host: okayment congressman? >> guest: i think you're right. i think you're talking about the debt ceiling and porting in jeopardy the full phase and credit of the country will hurt everybody, surely middle class people and people who are trying to climb up the ladder. it's wreckless, and when they talk without, well, let's pay some of the bills, and let's not pay others. i said to a reporter, asked me yesterday about this, i said, well, now you tell me which ones. you know, individual homes have
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trouble doing that and prefer not to. a nation the greatest nation in the world says we're going to pay some bills and not others and bondholders and defense contractors, and social security recipients. >> host: jodi on twitter asks "why is medicare, social security, and veterans services the only thing we hear about? isn't there administrative costs?" >> guest: sure there's administrative costs. administrative costs in social security and medicare. by the way, it's in terms of administrative costs in better any other. of course there are. there's always a need to have more efficiency, but there is no excuse for tampering with the full faith and credit of the country. >> host: joe next, houston texas, republican caller. hi, joe. >> caller: thank you for
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taking my call. i have a question for you. the president ran on, you know, raises tacks on the upper class. he raised taxes on 77% of us. don't forget that. he also ran on for every dollar of revenue, he would have there are 3 in spending cuts. where are the spending cuts? >> host: congressman, where are the spending cuts? >> guest: well, the president laid out in his press conference, there's been a trillion and a half in terms of spending cuts. the budget control act, and before that, caps on appropriation bills, and those caps have been adhered to. it's a myth that we have not have spending cuts. the issue before us is are we going to rely only on those and which ones? are we going to have health care? i feel very deeply, i think, greta, so do most americans, in
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example the terms of health research. a quick story. my late wife was involved in, and she ran a peer review group at nih on child mental health and child development. when she started, she did that for 20-25 years. they would have for peer review, a hundred applications. they'd say maybe 50 of them were reviewed by peer review. out of those, they might pick 25 that really should be funded. in those days, not so long ago, there was enough money of the 20-25 topical -- top caliber to fund 15 #. today, it's one, two, or three of the original hundred, and the same is true in medical research in nih. they also don't have adequate funding for our health. are we beginning to further cut
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funding for nih for funding in the country? the same is true in terms of trending programs. we need to retrain americans so that their -- they're able to really qualify for every kind of job. we have a training deficit in this country. we need to combine training programs and do a better job. are we going to hurt that effort? that's what's at stake here when the republicans say, just cut regardless. they had no reason to remember yesterday to cut all discretionary notary public defense discretionary programs, and i think sadly a hundred and some republicans, i think, 50 voted for willie-nilly across the board. doesn't matter what it is. that's not the way we proceed. >> host: was this the amendment to the sandy relief bill? >> guest: it was. >> host: and it failed, 70
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republicans joined about 188 democrats to beat back that amendment put forth. on the tax side of the ledger, deductions and loopholes is what folks are talking about. when you say "balanced approach qtle, spending cuts, and deductions and loopholes and things like that. what are the big ones that would bring in the most revenue? >> guest: well, we've talked about the itemized deductions and they include mortgage interests, charitable contributions, ect.. we already took a step in that direction in the tax reform bill that we pass the tax bill, the so-called p's provision. we have to look at it better. there's a proposal, and where's the budget? well, the president had in budget proposals a 28% limit on deductions itemized deductions,
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and i think we need to look at that, but carefully, charitable contributions, for example, mortgage interests, state and local taxes so that's a major area and the president proposed essentially $600 or $700 billion in ten years from that areament i don't think we can now obtain that much even if we adopt the president's 28% limit, but -- >> host: why not? >> guest: why not? because i think we have to look at the impact on charitable contributions. most -- half of the charitable contributions in the country, a lot of us, most contribute something, but a lot comes from the very wealthy. i think we need to be careful we don't come too --
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come down too hard -- >> host: we need more coffee. >> guest: we have to look at that, and, also, let me mention interest. most viewers probably don't know what carrieded interest is, but when people manage other people's money, the way the system now works that part of what they receive, the small part they have to pay ordinary income tax on, but when it comes to managing other people's money, they pay capital gains on a considerable portion of that. that is for managing other people's money, and we should change that. >> host: so that's carried interest? >> guest: that's called carried interest. >> host: okay. a hedge fund manager, for example, pays 15% on whatever he makes from managing other people's money? >> guest: when he receives a small fee, he pays ordinary income tax. >> host: okay.
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>> guest: but when he -- when they sell something and get a major profit, even though it's for services provided, they pay -- >> washington journal airs live every morning at seven eastern on c-span. live to hear from the president and ceo of the federal reserve bank of dallas. richard fisher. he's speaking to the committee of the republic to downsize institutions that are too big to fail. it's just getting started. >> most of the ancestors were prominent colonial virginians during the period of the colonies, but we're mostly anticrown and so i asked john why is it that patrick henry was the most outspoken, and his answer was incredibly candid. richard, it's because he was poor. well, however poor he was, patrick henry was a rich order, and one of the greatest speeches, he said, eni quote, different men often see the same subject in different light, and,
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this afternoon, i hope it's not thought disrespectful to those gentlemen if entertaining as a do a character very opposite of theirs. i speak forth sentiments freely and without reserve, and he concluded, this is no time for ceremony. it's one awful moment for our country. patrick hep reimbursement was addressing the repression of the american colonies by the british crown, and tonight, i wish to speak to a different kind of repression, the injustice of being held hostage to the large financial institutions considered too big to fail or by the acronym, tbtf. i submit these institutions privilege status exact an unfair tax upon the american people, and moreover, they interfere with the transition of monetary policy, which is my business, and they inhibit advancement of the nation's economic prosperity. i've spoken on this for several years as you pointed out, john. i began with a speesh in july of
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2009 titled pathology of too big to fail, and my colleague is a highly respected microeconomyist and dow feds director research, and i and my staff have written about it extensively, and tomorrow, we'll be issuing a special report available only net that further has a proposal for dealing with the pathology of too big to fail, and it also incidentally addresses the superior performance of community banks and regional banks during the recent crisis and how they have been victimized by the excessive regulation that stems from responses to the counterparts known as too big to fail. i urge you all to access the report when we make it public tomorrow. ..
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everyone and their sister and as financial institutions that are too big to fail, or is he mentioned the epicenter of the 2007, 2009 financial crisis previously thought of as islands of safety became agents and enablers of a financial tsunami. now that the storm has subsided, we at the dallas fed submit they are the key reasons the monetary policy and government policies have failed to adequately effect the economic recovery. harvey rosenblum and after a
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certain article about this in "the wall street journal" september 2090 we titled it the blob that ate monetary policy. put simply, sick bakes don't mind. seriously undercapitalized megabanks stop the run the capital markets activity during the crisis and economic recovery. they brought economic growth to a standstill and then spread their sickness to the rest of the banking system. congress thought it would address that matter for what is known as the dark frank wall street reform and consumer protection act. preventing too big to sail from occurring again is in the preamble of dodd-frank and has made things worse not better. we submit that parts of dodd-frank have exacerbated the kid, grows by key fact is that the united states economy.
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it has benefited many. they are known as lawyers and has created levels of bureaucracy. despite the attention we believe it's been counterproductive and working against solving the core problem it seeks to address, too big to fail. let me define what i mean. the fed's definition is financial firms whose managers and customers believe themselves to be exempt from the process of bankruptcy and creative destruction. such words capture the financial upside of their actions, but largely avoid payments for actions gone wrong and leave bankruptcy enclosure. in violation of one of the basic tenets of americans have capitalism. such burns injuries subsidies relative to non-to the detail competitors. it is likely to take greater
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risk in search of profits protected by the presumption that bankruptcy is highly unlikely to obtain. the phenomenon of sure and three as a result of an implicit the way they taken for granted government sanctioned policy coming to the aid of the owners and managers and creditors of a financial institution deemed to be so large as though interconnect and complex that its failure could damage the financial system. systemically important financial institutions. i reducing a too big to fail firms exposure to loss from excessive risk-taking, such policies undermine the discipline of market forces normally assert on management decision-making. the reduction of market discipline has been further eroded by simplistic dissension that the safety net beyond commercial banks that are nonbank affiliate. moreover, industry consolidation may subsidize growth in the crisis encouraged out right by the federal government of acquisition at merrill, bear stearns, while co-via have
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further perpetuated the weight of financial firms team to the two sailors chemically important. the net result is this. dodd-frank does not do enough to concern the behemoth advantages. given its complexity, it unwittingly exacerbates them. under how did the highly respect to the bank of england at jackson hole this summer, and a witty he titled the dog in the free speech. here are some choice passages from the noteworthy speech. regulators efforts to catch the crisis frisbie have continued to escalate. casual empiricism reveals an ever-growing number of regulators, ever larger litters have not rdc approved the watchdogs frisbee catching
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abilities. after all, a regulator had the foresight to predict financial crisis although some have exhibited supernatural parties in hindsight. so what is the secret of the watchdogs failure he asked? the answer is simple or rather it is complexity or complex regulation might not just speak costly and cumbersome, but in some tool. less may be more. and listening to him speak i was reminded of common sense great clip after president wilson presented his 14 points. by 14? god didn't intend. for 14 points of regulation to contend with today. the dodd-frank and greater ever financial regulation. he points and 18 he thinks, what we call call reports, reports
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received from bank holding companies covered 547 columns by excel at the 1999, 1290 columns. by 2011, 2271 columns of xl reporting. fortunately, he added dryly. xl has expanded sufficiently to capture those increases. though this complex reporting field to prevent the detention of the detection of the debacle 2007 in 2009, dodd-frank has layered on copious amounts of new complexity of the legislation has 16 titles and rents 849 pages. has let her come promoter of regulators and regulations. more than 8800 pages of regulations have been proposed in the process is not yet done. in his speech, holliday noted conservatively in my view that a
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survey shows complying with rules require 2,260,231 labor hours each year. he added the cost of this regulatory edifice to be small if they delivered modest improvements to regulators ability to avert future crises. he then goes on to argue the wake is not worth the candle and concludes, modern finance is complex, perhaps too complex. regulation of modern finance is complex almost certainly too complex. a configuration spells trouble is you do not fight fire with fire, do not fight complexity with complexity. the situation requires a response gun and simplicity, not at city pearce delivering that would require return. the dallas federal reserve's proposal offers a way to amend the flaws in dodd-frank. we will speak of it this
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evening. for its take complexity that complicity or are appropriate and eliminates much of the mumbo-jumbo and effective costs and complexity of dodd-frank and would be especially helpful to not too big to fail banks that do not post this tonight or progress to the economy or financial system. our proposal to the small banks of unnecessary burdens rising but unfairly penalizes them. our proposal would effectively level the playing field for all organizations in the country can provide the best protection for citizens. in a nutshell, we recommend to the dallas fed that too big to fail institutions be restructured into multiple business entities. only the resulting dump that commercial banking operations, not the shadow banking affiliates or the parent company with nsa from the safety net of federal discount -- deposit insurance or access to federal reserve discount window. it is important to evaluate this
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against an understanding of the landscape of banking today to understand our proposal. so here's a little chart and what it tells you is the following. third-quarter 2012 are approximately 5600 commercial banking organizations in the united states. subvocal days, roughly 5500 were community banks assets of less than 10 billion. these community focused organizations comprise 90.6% of all banks in only 12% of the industry's assets. another group numbering nearly 70 big in organizations with assets between 10 and 250 billion account for 1.2% of banks to control 19% of the asset. the remaining group, megabanks, assets between 250 billion in 3 trillion is made up of a merit
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12 institutions. these dozen behemoths account for roughly 0.2 comments 0.2% of all banks but this was 69% of all the assets of the industry. the 12 institutions presently account for 69% of total industry is that their candidates to be considered too big to fail because of the threat they could pose to the financial system and the economy should want to market. i contrasted any other 99.8% of banking institutions get on top of the most likely be handled with private sector ownership changes and minimal government intervention. however why does this work for 99.8%, but not the other .2%? it helps to consider the services of regulatory and market discipline post on each of these groups of banks is socially a slide that looks at two dimensions.
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potential closure and effectiveness on bank management practices. as summarized in a slide that i hope is behind me if they speak. if you look across fine when it's clear community banks are subject to considerable discipline. they can and do fail in the last few years the ftse has built a reputation for regulators carrying out creative destruction by taking out a small banks on a friday evening and reopening them to new owners on a monday morning. and on friday, out on monday. knowing the power supervisors to close the institution, owners and managers of turning things heed suggestions to limit risk. community banks often have few significant shareholders who have a considerable portion of wild type to the fate of that institution and consequently exert substantial control of
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management as potential closure matter to them, their money separatists. the bulk of funding for federally insured deposits are simple rather than complex in our capital structure. they rarely have uninsured creditors. market discipline over management practices primarily exerted through the limited number of shareholders. at the three groups on the site, the 70 regional and moderate face thinking organization depicted in mind to are a range modern discipline. these institutions are not exempt from the bankruptcy process. they can and do fail, but given larger geographic footprints, the resolution process cannot always be accomplished over the weekend. in practice, owners and managers of institutions are nonetheless aware of the downside consequence of risk taken by bad management for the institution
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peer creditors aware of unprotected status in the event the institution experiences financial difficulties. they receive a good dose of external discipline from supervisors and market the signals. on the other hand, the today two-term megabanks depicted in line three receive far too little regulatory and market discipline. for all intents and purposes we believe today to fill banks have not been allowed to fail outright and knowing that, and management of these banks can and to a large extent do choose to resist advice and guidance of supervisors efforts impose regulatory discipline and the force of market discipline shareholders and unsecured creditors are limited.
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i'm a first walk you through this plan from shareholders. billions of shareholders to the ability to prevent the management from pursuing corporate strategies profitable for management are not necessarily for shareholders. as they learned during the crisis, adverse information on poor financial performance often is available, but too late for shareholder reaction or credit default swap spreads have any impact on management behavior. for example, shares and two of the largest bank holding companies, two of the largest to date to fill bank holding companies declined by 95% from peak prices and credit default swaps that haywire. even though the decisions that led to the market reaction had occurred well ahead of them. and then the rating agencies. agencies eventually reacted in keeping with our tendency to be reactive rather than product.
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but the damage from excessive risk-taking hunter depend on and after the crisis, judging from the behavior of many but not all of the largest bank holding companies with limited exception. efforts by shareholders of these institutions to meaningfully influence management compensation practices for bad decisions made in compensation report have been slow in coming. so much for shareholder discipline on too big to fail banks. unfortunately too big to fail banks do not face external discipline from unsecured creditors are an important asset is the funding source for megabanks extend way beyond insured deposits is referred to him and ago my mention of credit default swaps. largest banks from themselves with a wide range of liabilities are these include large negotiable cds which often exceed the insurance lament,
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federal funds purchased from other banks, all of which are uninsured and bonds generally unsecured. it's not unusual for such uninsured liabilities to surprise the voter will have of liabilities of too big to fail institutions. market discipline were imposed, one would expect it to come from unsecured uninsured depositors, creditors and debt holders. but today to show status exerts what we call a perverse market discipline and risk-taking activities of banks. unsecured creditors recognize implicit government guarantee they have a liabilities and as a result, unsecured depositors and creditors suffer from a lower cost to today to fill banks into midsize family snowbanks that face the risk of failure. the today to the subsidy is quite large and has risen, not
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declined following the recent financial crisis. recent estimates suggest implicit guarantee provides the largest u.s. bank holding companies of the credit rating uplift of more than two notches. thereby lowering the average funding cost a full percentage point to smaller competitors. i offer mentioned the bank of england estimates the implicit today to fill global subsidy to be roughly 300 billion per year for the 29th global institutions identified by the financial stability for ecstatically important. to put that 300 per spec did, all the u.s. holding companies reported 20 living earnings of 108 billion. add to that the burdens stemming from complexity of today to fill banks. here's the basic organization chart or diagram to simplify a
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complex structure, one might consider all the operations other than commercial banking operation, the little box on the bottom left over my shoulder, all other operations are what you could call shadow banking affiliates, including special investment vehicles in the commercial bank. consider this next table. it gives you a sense of the size and scope of the five largest bank holding companies, noting on deposit liabilities and billions of dollars in the number of total subsidiaries in countries of operation according to the financial stability oversight council, one of boyd and grace even institutions. to put this in perspective, let's consider lehman brothers. the resolution is not yet over any of the men operated a mere 209 subsidiaries according to the 10 k. filing across 21
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companies with liabilities of a mere 618 billion. by these metrics, lesion is a small player compared to the big five. if lehman brothers is too big while still growing concern, what can we infer from the big five on the table over my shoulder? well, dodd-frank addresses this concern under the liquidation of 30 provisions the act of systemically important institutions would receive that current financing from the u.s. treasury over the period from which its operations need to be stabilized. irb at the dataset, this is quasi-nationalization ever consider financial institutions even on a 10 great bases to be a clear distortion of american print. of course an alternative but to be to have another systemically important institution.
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regarding them down that road. all it does is compound the problem expanding the risk posed by a larger survey became its organization. in addition, perpetuating shotgun marriages between giants at taxpayer expense worsens the funding disadvantage of the 99th when he small and regional banks urging large institutions is a form of discrimination that favors the unwieldy and dangerous today to fill banks over more focused faith and discipline banks. the approach of the dallas fed that i've explained earlier neither expands the reach of government are further handicaps regional banks darvocet fight complexity with complexity. assembly calls for reshaping today to fill financial and dictation into smaller, less complex institutions that are economically viable, profitable,
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competitively able to cap talent in our size complexity and scope for regulatory and market discipline to restrain excessive risk-taking. our proposal is sent will. it's easy to understand. it can be accomplished with minimum statutory modification. it can be implemented at the subtle intervention as possible cause for going back to safety net to apply only to basic traditional commercial banking. a cause for clarifying understandable disclosures that the federal safety net applies only to commercial banks and customers and never ever to customers of any other affiliated subsidiary for the holding company of shadow banking companies immaturity showed you earlier from ms never received taxpayer support. we recognize i'm doing customer inertia and investment habits
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had to be to fill institutions can take years. during such a period, banks could say the seats for another financial crisis and for these reasons, conditional access is necessary. ping-ponging companies may need to be downsized and restructured so that they cannot support a commercial bank in part of the holding come any can be effectively discipline by regulators and market forces will likely have to be additional restrictions or prohibitions on the ability to have assets or liabilities from a banking affiliates who think an affiliate within the holding company. we saw the toothpaste or in the crisis and it should not happen. to illustrate the first two points of our plan, come back to the hypothetical structure of a complex financial holding company. recall of a commercial bank subsidiary and several that are not traditional banking at
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committees brokerage and finance operations and others operate over vast geographic reach. they should be allowed to operate. but not with government guarantee spirit on the commercial bank would have access to deposit insurance provided. only the commercial bank would have access to the discount window loans provided by organization, the federal reserve. these two features but explicitly by statute to become unavailable to many banking affiliate special investment for any application for the parent holding company. theoretically this is current is and yet practices not though. it is not viewed as likely to ever be enforced. to enforce the statute, every customer and counterparty of every shadow banking affiliate would be required to agree to
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and signing a covenant, a simple disclosure statement that acknowledges unprotected status and you can read this as well as i do. connecting business at this affiliate of the xyz holding company carries no federal deposit insurance further federal protection or guarantees. i fully understanding connecting business with the john henry banking affiliate have no federal deposit insurance protection or guarantees and investment is totally at risk. this two-part step should begin to remove the implicit today to fill subsidy pipping holding companies and operations. banks have inappropriately benefited from a safety net. our proposal promotes competition the latest market
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and regulatory discipline replacing the status quo to take risks. some government intervention may be necessary to accelerate the imposition of effective market discipline and british this practice. the blade market forces should be relied upon as much as is practical. however, it is true that an entrenched oligopoly is says in combination with customer inertia will likely only be overcome through government sanctioned from a rear cassation and restructured in been honing companies. he said he once skin is fairly possible to take away unless it appears they may they may need a push this in as little government necessary in order to realign incentives and reestablish landscape and level the playing field. a team at the dallas fed and i are confident the simple treatment to the complex problem
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into the risk posed by institutions that be the most effective treatment. think about it this way. at present, 9.8% of all banking organizations are subject to sufficient or shareholder market disciplines to contain risk of misbehavior that could threaten stability of the financial system and the american economy and the global economy. 0.2% are not. their very existence threatens both economic and financial stability and furthermore, regulators and many small banks are tied up and regulatory and legal amount and in our mr. acosta margin direct cause cause that have its efficient operation of our economy. 0.2% if the administration and the congress can agree as recently as two weeks ago on legislation that affects the 1%, surely can process the solution of 0.2% less costly, less
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complex, former effective in dodd-frank. our view is the time has come to change the decision-making paradigm. there should be more than two solutions which are bailout for the end of the world economy as we know it. both choices are unacceptable for the next financial crisis could cost within two years of economic output, which would boston be borne by millions more u.s. taxpayers. that horrendous costs must be weighed against the supposed that if it's a maintaining a today to fill status quo and to us at the dallas fed, the remedy is obvious. you and too big to fail now. in so doing level the playing field for banking institutions. i want to close by returning to patrick henry, john's ancestor.
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he noted and i quote it's natural to indulge in the illusions of hope. shutter is against a painful truth that must then to the song of the siren till she transforms us, end of quote. today we labor under the thoughts on the dodd-frank and the run up in the pricing of tanks stocks and credit, indulgent illusion of hope that this complex legislation will end too big to fail and write the banking system. we shut our eyes to the truth they too big to fail represents an ongoing nature not to financial stability, not fair competition, but the american way. the dallas federal reserve offers a modest but far more effect to fix to dodd-frank. the plan is not without cost and with less cost than alternatives for forward and reduces likelihood of another horrendous and cost a financial crisis.
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this may not be a time. they should instead be a time of promise. treating the pathology now would be a big step forward to say my stable financial and prosperous economic system call whenever thiessen fundamental principles of capitalism rather than regulatory complexity and increasing government intervention. thank you for being tolerant and i'd be happy to avoid answering any questions you might have. thank you. i thought [applause] is one of you guys going to handle the questions? >> as her son had to sign the affidavit i get to is the first question. you mentioned the politics
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further restructuring of a hockey tape plays. you point out the difficulty of politics, paraphrase shakespeare, hath no fury like a scorned. what are the politics on capitol hill? i gather from what you are saying this would require some congressional action to better politically democratically. so what does it look like in capitol hill? you make a good point, which is this is not so much regulatory issue. we do operate as regulators at the command of lawmakers, sociopolitical issue in their several dimensions of space, obviously you have to get those to make the laws on your side. i view this as a win-win for both sides said i'll tell you why. the most powerful force in a country fair to exercise a muscle or bankers.
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he saw the numbers in which they exist. there's thousands upon thousands of them. they know every member of the legislature because they help them get started. they know who they sleep with, had a drink with what their habits are, good or bad. it is in their interest to longer be placed at a disadvantage in terms of cost of funding is a competitive disadvantage of knowing if they screw up they will be closed over the weekend. the understand principles, was by then. it's not fair, so i think there's political muscle exercise here. maybe this is something appealing to the left if you consider the left being democratic, republican as well as the middle. senator vitter in the democratic side of the aisle, but also people like jim demint and
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others have expressed a favorable view towards this approach. i realize the latter has been longer in the senate, but they represent the pointer. some people might say he would not have been in favor of this. so i think it's appealing. the difficulty is replacing complexity with people in capitol hill sent to the simplicity and something to me basically sound. winston churchill had a great quote that everything agreeable is unsound. i expect disagreement here. i hope i read in the national journal this week with regard to the new nominee for secretary of the treasury broke quite a long piece on this and is reputed favoritism for large financial institutions will not hold because he's a capable individual and i hope because his job. so i believe you might have support in the executive, but
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the support really is to come from the congress. they make the laws. they have created this massive thing called dodd-frank, which we are only partly through in terms of interpreting and figuring out how to work and i think it's much more appealing and with the banker support will be fully in support of this issue. this is some thing within bird dogging, to go back to the references to my friend for quite some time and i think it's gaining momentum, but it will not be easy. as i said earlier, he's benefiting? lawyers and burkart. -- bureaucrats. john? >> i'm half australian, so i always have to -- this is water.
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yes, sir. >> i'm robert weisner, public citizen. thank you for leading on this. i have a two-part question. maybe it's two questions disguised as one. as you know better than me, bernie frank and chris dodd would say we don't do too big to fail and we meant it and i just worry the affidavit approach as regulators who really, really mean it and that's not sufficient to convince bankers are the markets. i'm curious of the party did not decide, the backdrop to actually separate institutions in which your thoughts are about that. second component is your thoughts on the emerging problem of too big to jail.
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something that's taken so much time to put together. i got a little distracted there. if the legislative process and how do we get it done? was such a question? [inaudible] >> the market severity indicated a taste for this. since we first published the article that i refer to, we have received enormous support from the fellow that made the morgan stanley what it is today. some of the top regional bankers in the country like tom frost is a change in the industry in texas and nationally. for mr. stevenson arkansas and to my great surprise and i'm still scratching my head on this one, the fellow that started it all a citigroup. so i do see an outpouring of support for this effort in the
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real question is how do you get it the members of our legislator that is so much to worry about right now to focus on this issue? i think it is important for them to understand this is part of the problem as to why we have not recovered as quickly as possible. i refer to them passing and have written a great deal about it but the monetary policy, but a proven manager manager of a large institution and have a massive portion of the industry's assets in your preoccupied retailing issues you mentioned and inferred comments are free to focus on your business. you become too complex and too large to manage and there's an issue of scale. so i would submit and i have submitted and i've written about this a great deal. was a lemon has written about a it, simon johnson the great scholar has written about it and others, that what is happening to your is one of the reasons we have not clicked as quickly as
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possible in recovering from the crisis is because the transition mechanism for monetary policy is found up. think of it as sludge in the motor of your engine. it's hard to get the pistons to move. we provide the fuel, the central bank. it has to be into the economy. we not only have to inducer and sent people to step on the accelerator to create more jobs. that's a matter of having to rip us from our vacations, tax incentives and so on, that has to be transmitted to the banking system. these banks are in such deep trouble in control so much of the assets have been focused on other things. they are interfering the effectiveness for accommodative monetary policy. if you get people to understand this is hurting job creation in the district come he might more political support. i believe this support is gaining ground. it's not just a question of fairness. it's a question of efficacy.
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and i believe it is beginning to gain ground. [inaudible] >> that's up to people on the hill and the people that want to support this effort. it takes to fix greater to that. that may mean it's not doable. i don't think so. >> thank you for being with us this evening. i'm at catcher catcher and the university of virginia and i really would like to give you the opportunity to just clarify the proposal that gather the dallas fed is going to put on its website at work analyzing and writing. the problems you're discussing i've heard remedies of one file in the classical approach and a
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commercial bank in the details seem to be our second order of complexity. but isolate the commercial bank of divinity from everything else. the second is to put a size cap on commercial banks. i heard the figure 50 billion at the proposal. do i understand you and your colleagues at the dallas fed have thought about these alternatives and rejected them in favor of the proposal you now advancing? and if so, if i got that correctly, can you amplify a bit on the reasons why you think they are a bad idea. >> i think the industry changed from when i was a banker and chairman of the private bank where the owners, which were the partners bore all the risk personally. we've gone from the old
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mentality, preclassic overture's commercial banks are balance sheet driven. you were disciplined and externally to make sure you protect du jour deposited and intermediated short-term unease with longer-term loans. but it really was a balance sheet driven industry. along came my friend sandy while, who i refer to earlier, a brilliant fellow, who through the transaction figured out a way in essence to transform banking to an income statement driven business. when a hedge fund for years as you mentioned, cared about what i made every year and is a different culture than experienced as a banker. i'm not sure sure we can stuff the dodd-frank genie back into the bottle. we're not saying, that the holding companies cannot engage in other activities. we are saying they will not have government guarantees.
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hill not far from the discount window, plain and simple and everyone of the clients who acknowledge the fact that money is at risk. so it's not for big-name. it doesn't formally split, but it applies to guarantees only to a specific practice of what we call commercial banking, to the deposit taking and to see into none of the rest would be made extremely clear. asked if the size, prohibitions, my colleague at the board of governors come, dan cirillo has talked a little bit about that. i've only been up to him in terms of his responsibility to implement dodd-frank. she's been quite frank about the difficulty of doing so. i'm a little roulette game, just given a philosophical event to artificially engineer size. i do believe marcus will solve these problems if they make very
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clear what the rules are. but just to be honest with you, i have a hard time saying x is the size because i don't want to inhibit success. what i do want to prevent his fleecing the american taxpayer at risk. that's what government intermediates. they decide how much money they take and how much they spend we can dispute and argue about that constantly. to leap up into the taxpayer unlimited playability for bad decisions taken in the pursuit of an income statement driven mentality seems to be unjust and un-american and that's the statement that i'm making and we propose a simple solution for the market than impose discipline. you begin to see people should dismiss this already and he saw that because some are complex organizations treated a lower multiple than those with police complex structures.
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the market taking care wants the rules are clearly established here but the rules are hyper complex and still enormously murky and i think it's hard to figure which end is up and i can tell you as part of the team trying to implement under the law created by people in the legislature and in her case over 300 plus different aspects of dodd-frank can only be partway through, this is a very complicated process. so ours is an effort of simplicity, fairness and making clear that the american taxpayer is only liable for a specific practices on this as well performed are fights that guarantee. no more complex than that. bill. >> richard, i am a customer and
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shareholder in bank of america. none of bank of america's published reports or documents give me any indication as to what the real assets and liabilities are. i suspect that their balance sheet is laden with tier three asset, representing customer commendation in the form of complex derivative transactions that allocate triumphs of dollars of risk on a basis which hopefully not that convinced the bank a much higher return than your commercial bank would give them. now, in your scheme, is there assurance that the disclaimer would apply to other counterparties, to those complex truth of transactions so that john $75 trillion would be totally private-sector risk and i as a depositor would not be exposed because my fear is that
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bank of america will play chicken and say okay, yes formally if only guaranteed the deposits to commercial bank, but we can make money on these risky to three transactions accommodating customers and that the counterparties freeze, what happens? >> that's exactly the purpose of the proposal, to prevent that from happening. >> well, what the market in wednesday's these horrible exposures? >> it's up to the market to unwind, but i'm saying you're a depositor, pastorius you put it and i don't believe either you directly or as a taxpayer should be placed at risk for derivative transactions. you can conduct those responsibly, but she should be guaranteed by the federal government if you make a mistake in the spirit that's over saying in that simple declaration,
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which any sixth grader could read and understand the surprise cyberpurpose in those transactions. so bill, you nailed it. that's why you're chairman of this organization. [inaudible] [inaudible] >> we do our best as regulators to make that possible, but i report that back my colleagues. how's that? i'm a thank you for letting me speak here. it's an honor to speak and i told nancy, my wife who is not on this trip, but i said is speaking at the national press club, committee of the republic i mention two other people who are spoken here. in your wildest dreams did you
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ever think i would be in a podium in front of this group at this place? keynoter response was? and chuck does nancy well. richard, we've been married 40 years. you don't appear in my wildest dreams. [laughter] thank you for having me here. [applause] [inaudible conversations] >> an article in the dallas news about the speech by richard fisher says the headline, dallas provides a peek at a proposal to
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fix too big to fail megabanks. the article goes on that says the dallas fed proposal offers a way to an amended flaws in the dodd-frank law. fisher's speech is a preview of the report the dallas fed plans to release tomorrow on how community banks are unfairly hurt by excessive regulation designed for their much larger peers. that and the dallas natives. c-span: wanted to write a book about your experience? >> guest: it was an important period of history. i felt the ftse's perspective should be brought to bear. there have been other accounts of the crisis i thought were not completely accurate in terms of what we did and when i did, so i thought it was important for the historical record to prevent our perspective and also currently for people to understand their different policy choices, options, disagreements. and if you want to present this
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crisis from happening again, i felt the public itself needed to engage more on financial reform to commit entries to educate themselves better, make an issue with elected officials. i have policy recommendations at the end that i hope people will look at and take seriously. >> far ahead of the federal insurance corp., sheila bair on the role during the worst financial crisis since the depression. her book is "bull by the horns." sunday night at 8:00 on c-span's "q&a."
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>> the greatest honor history can bestow the title of peacemaker. based on our now beckons americana. the chance to help lead the world that last half of the turmoil and onto the high ground of peace that man has streamed out of since the dawn of civilization. >> we must embark on a new program with the benefits of art assigned specific advances in industrial projects available for the improvement of underdeveloped areas.
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>> now, knocking on preparations for president about his inauguration on monday. representatives of the inaugural committee, u.s. capitol police and military spoke with reporters for a little less than an hour. we'll watch this until our live coverage of nevada governor, brian sandoval. >> okay, thank you very much. thank you to the press club for hosting us today. to warn you, this'll be a bit of a dance as they try to read through this chronologically. as you can imagine, a lot of different players are involved in the events taking place over the next few days. i name is brent colburn -- that's brent colburn. i am committed keeshan's director for the macro committee and we are involved in this weekend doing a lot of the public events that follow aside the official swearing-in, which mac can talk to. in fact, as they think about this, it may make sense to do
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this not chronologically into different sections and in fact mac, if you want to walk through the chase oxide and in oxide amendment gtf site if that's okay with folks. the three main groups that put this together is the pic and we represent the president and vice presidents equities were caused by a governmental organization set up or refer you to represent the president and the presidency is. we work with the gtf on the parade, the niagara falls, which we'll talk about later another events a year but today that the national day of service and kids in a children's concert. then congress equities here they do with the official swearing-in pieces and then the jtf which does the military piece, obviously huge beast upon the we'll talk about her may support standpoint and at the top thank you to law enforcement partners who represent a huge law
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enforcement presence that will help us keep us all safe over the next four or five days. but that, matt, if you want to talk about what you guys will be doing. >> tanks, brian. good morning, everybody. i am madhouse, press secretary for the joint congressional committee on inaugural ceremonies. our purview of events is primarily everything on capitol hill on monday. as a staff in both planning activities for about a year now. the inauguration operations begin the minute the previous one ends. dissent has been hard at work for many months preparing for men they do not want to talk a little very briefly about our team and then i walked through some logistical components briefly and then of course i'm happy to answer additional questions at the end. the theme for the serious faith in america's future, a theme
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selector by chairman schumer. this year marks the 105th deity or since the completion of the capitol dome at the capping of the statute freedom placed on top. the project began in the 1850s and stopped midway through when the civil war broke out and there is a question on congress and the president as to whether he could fight a civil war and finish the job. president lincoln said if people see the capital calling on, it's a sign we intend the union shall go on. so congress on the money, came together, were able to complete the capitol dome in the midst of the civil war and senator schumer selected this theme nowhere challenges he faces a country now. if we look at what we accomplished 150 or so we can find faith that we can overcome these obstacles again. disable and form remarks throughout the day. it will be in the program materials distributed to folks to come to the capitol to see
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ceremonies and you'll see in various elements program. the day for our committee begins at about 9:00 when members say to the white house for coffee and tea with the president. senator mcconnell joins that group. from there, there is coffee with the president, vice president, first lady and dr. biden as well and everyone makes their way to the capital at about 10 or 10:30 depending on how the coffee and tea proceeds. our members come a few minutes ahead of the president, will greet the president and senator schumer is a comment on the senate side of the capitol at 10:40 and then everyone goes into the capital, start the procession out with dignitaries, former presidents in the vips announced at 11:00 and proceeds for 30 minutes from the president is introduced onto the platform.
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senator schumer opening ceremonies of the few remarks and printable talk later on the program proceeds from there. folks coming to the mall to watch the ceremony with a ticket to the ticketing area, with open doors at 7:00 a.m. we've advised everyone to make sure they are there by 9:30 to make sure there's time for screening and ever and can get through to their ticketed plays in time to see the festivities. got a number of crowd management strategies to improve on some of the systems in place last time to prevent some of the issues folks experience getting into ceremonies and i'm happy to speak more to that during the q&a session. we have planned for many, many months for crowds of all sizes. we think if we have a great system in place to make sure if one has a take it or comes to the non-ticketed area can see the ceremony senate happy to go into more detail during the
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question-and-answer session. so i'll turn it back to brand. >> thank you, matt. just complete with the money portion will look like on the capital, senator schumer bovo comments and then began what is a run of show for the inauguration day, for the ceremonial swearing-in on monday. vice president and administer the oath of office by supreme court justice sonia sotomayor who will be the first latino ever to do a swearing-in for president or vice president in the fourth domain. you will be done on the biden family bible, the same used by vice president titan four years ago at iraqi swearing-in's. following the swearing-in of the vice president, james taylor will sing america the beautifulcomment rich president obama will administer the oath of office. this will be done like four years ago and is done traditionally by supreme court justice john roberts. two biblew


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